Breaking the Silence: Unconventionals in Hungary

According to Gabor Bada, Exploration Manager at Falcon/TMX Oil & Gas Hungary, news of unconventional activities in Hungary had been silent for a couple of years for a good reason. “I would like to shed some light on what has been going on in this part of the world,” he offered.

Dr. Bada showed a risk profile for various gas resources in an area of Hungary, explaining “This shows you have small gas fields in the area - it’s the mature part of they hydrocarbon system. As you go higher in resources the risks increase,” he said, according to a graph that showed unconventionals to have a high level of risk.

“You have to take high risks,” he opined. “We were the first company to search for unconventionals in the Pannonian basin, which was a painful and expensive learning curve that we were running through.”

The Pannonian basin, he explained, offered probably one of the youngest unconventional systems in the world, formed some 20 million years ago. He noted, “It’s a highly irregular basin in terms of depth.”

“Pioneers always pay a high price,” he said, noting Falcon’s trailblazing efforts in Hungary, where he said the unconventional resources were in the deep basins, buried 3-5 kilometers below the surface.

“The source of the hydrocarbons that are accumulated on the structural highs that have been exploited for the last 50-60 years are coming from these deep basins,” explained Dr. Bada, who recalled operations in Hungary’s Mako Trough and how they started back in 2005. At that time, Falcon and TXM acquired exploration licenses.

After providing the steps of the partners’ simple plan, he said that exploration had cost approximately $250 million.

“We had a conceptual model, identifying the source rocks, and above that some sweet spots. There were tight rocks, abnormal pressures, and no traps but cells,” explained Bada.

Falcon operations, he continued, had no horizontal wells. He added: “All of these drillings and tests showed hydrocarbons, but the presence of H2S prevented full testing and production with the casing used.”

Then, in 2008-09 came the joint venture with Exxon-Mobil, out of which emerged the first full test with the correct casing design.

“This produced high pressure gas and a lot of water. We went back trying to understand why this happened, and identified a number of fracture systems. In this case the fractures were enemies rather than our friends – this is what happened,” explained Dr. Bada.

He stated: “All of the wells were encountering some serious overpressure which requires special attention.”

“Looking at the bigger players, OMV and MOL have said they’ll start refocusing on unconventional resources in the area. MOL actually did so in the eastern Hungary,” he said.

Serbia’s NIS was also running unconventional gas pilot projects, he said, in Serbia.

Dr. Bada provided a summary of Falcon’s experiences and the lessons learned.

“There are several unconventional play types in the Pannonian system,” he explained. “The future of these projects will heavily rely on new types of G&G methodologies and engineering technology to make these plays work. After ExxonMobil left everyone went silent.”

Despite this, Dr. Bada said the countries sharing the Basin were now seeing increased signs of interest. “Slowly but surely the area is gathering momentum,” he added.

“This is what we’ve learned in the course of the last six years: It starts with a slow gathering of data and you’ll have to invest very heavily at the beginning,” he said, but offering that old log data could be dug out from archives.

“Analogues have certain limitations,” said Dr. Bada, whose final bit of advice was: “Think twice before choosing a partner, whether it be a giant or similar in size to your company. It will take longer and be more expensive than you anticipate.”